How does a business compete against a true fanatic?
A fanatic with a winning model?
A fanatic with access to resources?
The fanatic is, by definition, either oblivious to criticism - so convinced his path is correct - or he is constitutionally impervious to its effects.
He is NOT a rational player who sticks to conventional rules or employs conventional tactics. He has a higher threshold for pain, does not keep banker's hours, and revels in keeping foes off balance.
The fanatic chooses a path, making appropriate corrections as he proceeds, and sticks to it with stubborn resolve.
The fanatic is unrelenting in pursuit of his goals. He ignores short-term pain while maintaining focus on the long-term vision.
At first competitors ignore him. They are attacked constantly by quirky entrepreneurs. 99 percent of them fall away on their own, collapsing because of flaws in their models or from being starved of resources needed to establish their businesses. Established competitors have neither the time nor the inclination to worry about the upstarts.
However, the fanatic's long-term vision (or model) is correct.
He flies under the radar long enough to establish a toe-hold. He now has some staying power.
Competitors take notice. They hope to stop him with overwhelming force. His model is exposing flaws in their own, but they have neither the time nor the inclination to change that which brought so much success in the past.
The fanatic has access to resources. He can survive attacks. He can grow his business. And he does not play nice when competing.
Competitors try to buy the fanatic. But he is not a rational player. He believes he is building something great.
The fanatic steals market share and expands the market. He reaches scale and benefits from the economies. He plows all available capital back into the business, paying no dividend, never buying back stock.
Competitors are back on their heels. They now need better resources to compete. They come to regret the idea of total shareholder returns.
Competitors test their resolve and contemplate angering their institutional investors...In the interest of beating the fanatic, they ask, can we break our long-standing trend of quarter-over-quarter EPS growth to increase our marketing spend or to hire the people we need or to invest more maintenance capital into the business? Investors say no.
Competitors contemplate reducing their long-standing dividend payments. Investors say no.
Competitors contemplate suspending their buy-back initiatives. Investors say no.
All the while, the fanatic is unrelenting in his attack.